Facebook bets $2bn on Oculus winning virtual reality race

New York - Facebook is buying virtual reality company Oculus, betting $2 billion (R21.4bn) that its technology will become a new way for people to communicate, learn or be entertained.

“This is a long-term bet on the future of computing,” Facebook chief executive Mark Zuckerberg said on Tuesday. “I believe Oculus can be one of the platforms of the future.”

Oculus VR makes the Oculus Rift, a virtual reality headset that has received a lot of attention from video-game developers, though it has yet to be released for consumers. The headsets cover a user’s eyes and create an immersive world that reacts to turning one’s head or moving back and forth.

Beyond games, Zuckerberg said virtual reality headsets might someday be used to enjoy a courtside seat at a basketball game, study in a classroom, consult with a doctor face to face or shop in a virtual store. The technology also had social applications, he said.

“Imagine sharing not just moments with friends online but entire experiences and adventures,” he said.

It is Facebook’s second big acquisition in as many months. Last month the social network announced that it would pay $19bn for text messaging start-up WhatsApp, a transaction that has not yet closed.

“I don’t think you should expect us to make multiple multibillion-dollar acquisitions within a couple of months frequently,” Zuckerberg said.

But he called Oculus a “unique” company with a major lead on rivals in technology, engineering talent and developer interest.

Sony unveiled its own prototype virtual reality headset at a game-developers conference in San Francisco last week.

Zuckerberg said that virtual reality technology was a computing platform unto itself, comparing it to personal computers, which revolutionised the world in the 1970s and 1980s, and cellphones.

Facebook said that the deal included $400 million in cash and 23.1 million shares worth about $1.6bn. Oculus employees are also eligible for an additional $300m if the company achieves certain targets.

Facebook chief financial officer David Ebersman said Oculus was valued based on the expected returns from the video game industry alone, with a higher return expected if it could expand into communications, entertainment or other fields.

Zuckerberg said Facebook intended to let Oculus continue with its road map of development but help out with recruiting, marketing, infrastructure and opening doors to new partnerships.

Facebook said Oculus had received more than 75 000 pre-orders for second-generation development kits for the headset at $350 apiece. The kits would ship in July.

Sales of Oculus’s development kits alone were 10 times bigger than all other headsets in the history of virtual reality, said Antonio Rodriguez, the general partner of venture capital fund Matrix Partners, an early investor that put $18.5m into Oculus last year. – Sapa-AP

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